Wednesday, January 27, 2010

Markets encouraged by Federal Reserve statement

Dow gained 41 from buying in the last hour, but decliners were ahead of advancers by 10% & NAZ was up 17 (helped by Apple). Bank stocks liked the news from the Federal Reserve followed by buying but the Financial Index can't break away from trading sideways.


% Change

The Alerian MLP Index got a major haircut, down 7 to the 290s, it's still up YTD. The Dow Jones REIT Index gained 1+ to 175, remaining in its sideways trading zone. Junk bond funds were slightly lower. The VIX pulled back 1+ into the 23s as fears have eased from the start of the week. The yield on the 10-year Treasury bond was flattish, up 1 basis point to 3.64%.

Alerian MLP Index --- 2 months

Dow Jones REIT Index --- 2 months

VIX --- 2 months

Commodities sold off. Cold temps should have brought out buyers for oil, but they stayed home. Oil saw its 75 floor revert back to a ceiling while the same is happening for gold's 1100 former floor.

CLH10.NYM..Crude Oil Mar 10..73.67..Down 1.04

GCF10.CMX..Gold Jan 10..1,084.40 ..Down 13.50

Photo: Bloomberg

It was no surprise that the Federal Reserve kept interest rates near zero & restated its intention to cease buying mortgage backed securities in Mar. They said“the Committee will continue to evaluate its purchases of securities in light of the evolving economic outlook and conditions in financial markets.”

Fed Sees End to Mortgage-Debt Buying; Hoenig Dissents on Low-Rate Policy

Photo: Bloomberg

Apple (AAPL) will sell its tablet-style iPad starting at $499. The iPad, which is larger in size but similar in design the popular iPhone, was billed by Steve Jobs as "so much more intimate than a laptop and so much more capable than a smart phone." It has a 9.7" touch screen (a little bigger than the netbook screen I'm using now), is a half-inch thick, weighs 1½ pounds & comes with 16, 32 or 64 GB of flash memory storage. The basic models will cost $499, $599 & $699, depending on storage size. All models have Wi-Fi & Bluetooth connectivity built in, its battery lasts 10 hours & can sit for a month on standby without needing a charge. There is also a version with pay-as-you-go data plans from AT&T in the US which will cost more. The well advertised announcement did little for the stock, up 2 to 208.

Apple Unveils $499 IPad Tablet in Challenge to Dedicated E-Book Readers

Apple --- YTD

After the announcements by the FED & AAPL, buyers returned to the markets but not in a major way. The housing news in the AM was more telling & Caterpillar's (down 2.41 today) admission that the economies in the developed countries are not rebounding was most significant for me. The chart below shows Dow has returned to its starting point 2 months ago while NAZ has a nice gain. Earnings season is not going well.

Dow Jones Industrials --- 2 months

Nasdaq --- 2 months

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